Poor Service + Poor Employee relations = Pay raises and lifetime rewards for CEOs

United CEOs reaped rich rewards for 2010 merger - chicagotribune.com: "Airline CEO Jeff Smisek started 2010 with a vow not to receive any salary until Continental Airlines turned a profit, and ended the year with a pay raise and $4.4 million in total compensation after pulling off a merger with United Airlines.
Smisek, who is CEO of the merged carrier’s parent company, United Continental Holdings Inc., received salary of $791,250 and $3.6 million in other incentives at year's end. Directors determined that Continental would have been profitable for the year and also bumped up Smisek’s base pay following the Oct. 1 merger to $975,000, according to a proxy statement filed Friday with the Securities and Exchange Commission.

But Smisek’s compensation was dwarfed, on paper, by the $16.8 million awarded to Glenn Tilton, his pre-merger counterpart at Chicago-based United Airlines.

Tilton and other senior executives reaped hefty rewards for consummating a deal that created the world’s largest carrier and contributed to an 85 percent jump in the airline’s share price. United also exceeded its targets for customer satisfaction, on-time arrivals and financial performance for the year.

In addition to his base pay of $822,999, Tilton also received $2.7 million in a discretionary bonus awarded in September, shortly before the merger closed.

Under an employment agreement, Tilton won’t be able to tap about one-third of his total compensation until he resigns as non-executive chairman of United Continental at the close of 2012, however.

Tilton agreed to convert the cash severance he was eligible to receive by stepping down as United CEO into 207,157 restricted shares, with a grant date value of $5.1 million. The shares will vest at the end of next year, or earlier if he leaves his chairman’s role due to death, disability or without “cause,” according to the SEC filing.

Three senior United executives who left the company following the merger also pocketed ample pay and severance packages.

Former United president John Tague received $11.7 million in total compensation, including a $1.6 million bonus awarded in September. Former chief financial officer Kathryn Mikells received $9.4 million, including a $1.3 million bonus; while Graham Atkinson, president of the carrier’s Mileage Plus program, walked away with $6.9 million, including an $888,376 bonus.

In addition to health and life insurance benefits, the departed United executives are also eligible for lifetime flight benefits, elite frequent-flier status and lifetime membership in the company’s airport lounge clubs, according to the SEC filing.

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